Strong earnings propel US stocks higher
US stocks ended the week on a high note as earnings continued to outpace expectations. In total, 16 companies listed on the Standard & Poor’s 500 reported earnings Friday. More than three-quarters of the index’s companies to report earnings this season have beaten estimates.
The technology sector led the rally after Microsoft Corporation (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) beat profit estimates. Microsoft shares jumped almost 6 percent after revenue and net income exceeded expectations, led by a ten percent rise in commercial business. Amazon jumped more than 9.3 percent to reach an all-time high after reporting strong sales growth in North America. Analysts upgraded the online retailer’s price target to as much as $430 a share as a result.
The S&P 500 extended its winning streak to 4.4 percent this month after hitting another record high. The benchmark gauge edged up 0.44 percent to 1,759.77. The Dow Jones Industrial Average added 61 points to 15,570.30 after 21 of its 30 members reporting gains. Intel Corporation (NASDAQ:INTC) rounded out a strong day for tech stocks, advancing more than 1.9 percent. Booming tech shares helped the NASDAQ Composite gain 0.37 percent to 3,943.36.
“Earnings have been good enough and the liquidity spigot is open so that people see very little risk in the system,” said Charlie Smith of Fort Pitt Capital Group Inc. Smith was referring to the likelihood of prolonged stimulus, signalling the Federal Reserve probably won’t scale back asset purchases this year.
On the economic front, durable goods orders increased 3.7 percent in September, although the gains were concentrated in transport equipment. Durable goods excluding transportation fell 0.1 percent, a bad sign for investment. The drop in demand for non-transport goods is likely attributable to uncertainty concerning government spending. Uncertainty over government spending is likely to resurface in February should Democrats and Republicans fail to establish a long-term solution to the debt ceiling.
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